Academic journal article Journal of Accountancy

Big 5 Show No Quarter

Academic journal article Journal of Accountancy

Big 5 Show No Quarter

Article excerpt

Corporations may get to know their auditors better--after all, they'll be seeing them every 90 days instead of just once a year, according to new firm policies. The Big 5 have agreed to perform financial statement audits only for companies that allow them to review financial statements every quarter. Because these firms audit most of the corporations listed on the New York Stock Exchange, American Stock Exchange and Nasdaq, this policy will affect many companies.

The Journal of Accountancy spoke about this new development with Dan M. Guy, who in his 18 years at the AICPA was at the center of auditing standards setting (see "Former AICPA Vice-President Honored," below). "This is a very, very smart move," he said. "I've been talking to members of corporate boards about this for years. I personally wouldn't serve on any board, especially its audit committee, unless the company agreed to timely reviews of quarterly statements." Guy said quarterly reviews could help detect and prevent fraudulent financial reporting and reduce end-of-year surprises that come with big fourth-quarter adjustments. …

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